All achievers

Carlos Slim Helú

Financier and Philanthropist

Bad governments worry about the rich. Good governments worry about the poor.

Carlos Slim Helú, a young empresario in the 1970s. (Courtesy of Carlos Slim)
Carlos Slim Helú, a young impresario in the 1970s.

Carlos Slim’s father, Julién Slim Haddad, immigrated to Mexico from Lebanon at age 14. With one of his brothers, he opened a dry-goods store in Mexico City. When foreign investors fled the country following the revolution of 1910, Julián Slim resolved to remain in Mexico. By the 1920s, he had acquired a number of businesses and substantial real estate in the capital city. Julián married Doña Linda Helú, a daughter of Lebanese immigrants. The couple raised six children, of whom Carlos Slim Helú was the fifth.

The senior Slim encouraged all of his children to learn and understand finance. He gave each child a ledger to record expenditures. Young Carlos showed a special aptitude for numbers, and by age 12 was buying shares in the Bank of Mexico. When Carlos Slim was 13, his father died, and the next years were difficult for Carlos. He studied civil engineering at the Autonomous National University of Mexico (UNAM), and while still studying, began to teach mathematics and linear programming. After a few years of teaching, Carlos Slim incorporated his first business venture, a stock brokerage, Inversora Bursátil. The same year, he married Soumaya Domit; in future ventures, he combined the first letters of their names, as in the name of his holding company, Grupo Carso.

Remembering the lessons of thrift he had learned from his father, he and his growing family lived modestly, while earnings from his businesses were re-invested in expansion and more acquisitions. Over the next two decades, Carlos Slim astutely acquired companies he believed were undervalued and skillfully overhauled their management. He diversified methodically, investing in real estate, then a construction equipment company, then mining interests. The portfolio of Slim companies grew to include a printer, a tobacco company and retail stores.

Carlos Slim's mastery of numbers is legendary. In the 1960s, his studies of linear programming gave him a formidable edge in the business world. (Courtesy of Carlos Slim)
Carlos Slim’s mastery of numbers is legendary. In the 1960s, his studies of linear programming gave him an edge.

In 1982, Mexico plunged into an economic crisis. The government defaulted on its foreign debts, and many Mexican investors rushed to expatriate their capital. Carlos Slim’s confidence in his country held firm, and he acquired the Mexican affiliates of Reynolds Aluminum, General Tire and the Sanborn’s chain of stores and cafeterias. As the economy recovered, Slim’s fortune grew, and his acquisitions accelerated. He acquired the Mexican interests of a number of U.S.-based brands: Firestone tires, Hershey’s chocolate, Denny’s coffee shops. He bought and merged a number of insurance companies into the giant firm Seguros Inbursa.

Carlos Slim, Edward Whitacre, Jr., Chairman and CEO of SBC Communications, 1997 "Salute to Excellence" Program
Awards Council member Carlos Slim and daughter, Soumaya, with Edward Whitacre Jr., Chairman and CEO of AT&T, and his wife, Linda, at the Academy of Achievement’s 1997 “Salute to Excellence” program in Baltimore.

The greatest opportunity of all presented itself when the Mexican government began to divest itself of a number of state-owned monopolies. After taking the holding company public in 1990, Slim’s Grupo Carso, with French and American partners, purchased the state telephone company, Teléfonos de México (Telmex). Slim took a special interest in a small component of Telmex’s operations, the company’s fledgling cellular service. Slim had a unique idea for building the customer base for cell phone service in Mexico’s struggling economy. He sold the handsets with a month’s service prepaid, and rather than sending the customers a monthly bill, Slim enabled his customers to buy prepaid phone cards, using their minutes as needed. Telmex executives resisted the plan at first, convinced that aggressive promotion of prepaid cell phones would undermine the market for traditional landline service. As it happened, the prepaid program filled an enormous need, and the customer base grew by 66 percent every year for the next 15 years. In the wake of the dot.com bust of 2000, foreign-owned cellular ventures throughout Latin America floundered. Slim scooped them up, combining cellular services in a market he understood better than anyone else.

Financier Carlos Slim Helú, at home in Mexico CIty, 2000. (© Keith Dannemiller/CORBIS)
Financier and philanthropist Carlos Slim Helú, at home in Mexico City, 2000. His conglomerate includes education, healthcare, manufacturing, real estate, media, energy, retail, and financial services. He accounts for forty percent of the listings on the Mexican Stock Exchange, while his net worth of $50 billion is equivalent to six percent of Mexico’s GDP. His telephone company, Telmex, controls ninety percent of the Mexican landline telephone market.

Soon his company América Móvil had become the largest wireless services provider in Latin America. As the demand for wireless communication exploded, Slim’s enterprise grew to meet it. By 2007, his group of companies was valued at an estimated $150 billion. When Fortune magazine and other sources calculated the wealth of the world’s leading businessmen, they concluded that Carlos Slim, with an estimated personal fortune of $59 billion, was the richest man on Earth.

Former Israeli Premier (later President) Shimon Peres, Catherine B. Reynolds and Carlos Slim at the 2004 International Achievement Summit in Chicago.
Academy Patron and Council member Carlos Slim, Nobel Peace Prize laureate Shimon Peres, and Summit Host Catherine B. Reynolds in a discussion during the 2004 International Achievement Summit in Chicago, Illinois.

Proceeds from Carlos Slim’s ventures have endowed a number of charitable foundations. Since 1986, the Carso Foundation has concentrated on developing Mexico’s human capital through education and training programs. In 2007, an additional endowment of $4 billion has expanded Carso Foundation’s efforts to build infrastructure, promote education and reduce poverty, not only in Mexico, but throughout Latin America. The Museo Soumaya, established in 1994, was named in honor of Slim’s late wife, who ran the institution for many years. The museum preserves a world-class collection of Mexican and European art, while funding art research and conservation activities and sponsoring traveling exhibitions. The Telmex Foundation is one of the largest philanthropic institutions in Latin America. In addition to activities in health, nutrition, conservation and disaster relief, it has provided university scholarships for hundreds of thousands of talented students who would otherwise be unable to pursue higher education. Slim himself was the principal donor to the long-term project to restore and revitalize Mexico City’s downtown, the Centro Histórico.

Rodin's "The Thinker" on display at Museo Soumaya, named for Carlos Slim's late wife, Soumaya Domit. (Courtesy of Carlos Slim)
Auguste Rodin’s The Thinker on display at Museo Soumaya, named for Carlos Slim’s late wife, Soumaya Domit.

In 2008, Slim surprised the business world with his purchase of a 6.4 percent stake in the troubled New York Times Company. At the time his investment was made public, Slim’s holding in the company was valued at $27 million. The following year, as a global recession and declining advertising revenues took a particularly heavy toll on print-based “old media” companies, Slim made the Times Company a loan of $250 million. This infusion of cash, along with other strategic adjustments by Times management, steadied the company’s finances, and the Times repaid the loan, plus 14 percent interest, ahead of schedule. Slim and his family have purchased additional shares, raising their stake in the company to just over seven percent. They hold warrants to increase their holdings to 16 percent of the company’s total stock. Although Grupo Carso spokesmen denied any intention of buying out the Ochs-Sulzberger family, who have controlled the paper for generations, even the suggestion of such a plan caused a sharp rise in the price of New York Times stock, a dramatic demonstration of Carlos Slim’s influence in the word of finance.

Carlos Slim with his sons, daughters and sons-in-law. At last count, he had 17 grandchildren as well. (Courtesy of Carlos Slim)
Carlos Slim with his sons, daughters and sons-in-law. At last count, he had twenty-two grandchildren as well.

Forbes magazine’s 2010 survey of the world’s great fortunes confirmed earlier estimates that Carlos Slim was the world’s richest man. The survey ranked him as the world’s richest man again in 2011 and 2012. In the midst of this staggering success, the Slim family remains an unusually close-knit one. As Carlos Slim devoted more of his time to his philanthropic enterprises, his three sons took the reins of major components of Grupo Carso.

Carlos Slim and his three sons, Patrick, Carlos and Marco Antonio Slim Domit. (Courtesy of Carlos Slim)
Carlos Slim and his three sons, Patrick, Carlos and Marco Antonio Slim Domit. (Courtesy of Carlos Slim)

Despite the family’s enormous wealth, political development threatened the centerpiece of their business. In 2012, the Institutional Revolutionary Party (PRI), returned to power in Mexico after 12 years in opposition. Newly elected President Enrique Peña Nieto pledged to increase competition in the national economy by reducing the power of the largest companies, such as América Móvil. In the two years following the election, the company, in which Slim and his family members control 57 percent, saw its value decline by nearly $17 billion. Despite the decline in its stock price, América Móvil retained its dominant market share. In 2014 the company had 272 million wireless subscribers. In Mexico, 70 percent of mobile phone subscribers and 80 percent of landline users were América Móvil customers.

Telecommunications magnates Carlos Slim and Emilio Azcárraga, with his wife Sharon, and President Bill Clinton.
Telecommunications magnates Carlos Slim and Emilio Azcárraga, with his wife, Sharon, and President Bill Clinton at the 2006 International Achievement Summit in Los Angeles. Slim, Azcárraga and Clinton are Academy members.

Mexico’s Congress, at the behest of President Peña, prepared to impose antitrust penalties if the company did not reduce its share of the national market to less than 50 percent. Rather than submit to crushing penalties, Slim moved decisively and announced his decision to sell a number of the company’s assets. The operation of its wireless towers would be separated from the rest of the company, and he dropped his option to purchase a competitor, Dish Mexico. Although América Móvil would be losing 21 million customers and 4 million landlines, it stood to gain an estimated $8.6 billion in cash. Following Slim’s announcement, the company’s stock price soared to levels not seen since 2009. In the years to come América Móvil and the rest of Grupo Carso will operate in a more competitive marketplace, but Carlos Slim still vies with Bill Gates for the title of the world’s richest man.

Inducted Badge
Inducted in 1994

In 1982, when foreign investors were bailing out of Mexico’s troubled economy, Carlos Slim Helú bet on his country’s future and invested in a dizzying array of businesses, building an industrial empire, Grupo Carso, that included everything from candy and baked goods to automobile tires, mining and construction — from department stores and coffee shops to insurance and banking.

In the 1990s, he seized on another unexpected opportunity, investing in Telmex, the formerly state-owned telephone company. Slim focused on the most negligible area of the business, the fledgling mobile phone service. With only 25,000 customers in a nation of 90 million, it seemed an unpromising sector, but Carlos Slim had an extraordinary insight. Over the objections of Telmex executives, he implemented his “Gillette plan,” selling mobile phone handsets at a loss, like razor handles, and making a huge profit in prepaid phone cards. Slim’s plan enabled cash-strapped customers to use as much or as little phone service as they needed, without paying a monthly bill. By 2007, the company Slim built, América Móvil, had become the largest cellular phone service in Latin America and had made Carlos Slim the richest man in the world.

Now largely retired from business activities, Carlos Slim devotes his energies — and his vast fortune — to raising the standard of living throughout Latin America, through a network of foundations that are providing educational opportunities and health services, and building physical infrastructure from the Rio Grande to the Antarctic Circle.

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When you went into the cell phone business, you introduced a major innovation, selling prepaid phone cards along with the cell phones, so the customers could determine in advance how much they wanted to spend per month. The executives at Telmex all thought this was a mistake. How did you know it would be such a success? After all, you were coming from the insurance industry.

Carlos Slim: Well, insurance is very interesting.

In insurance, if you make the insurance of one car, it’s gambling.  It’s risky.  If you make insurance of 100,000 cars, it’s statistics.  It’s clear these risks are not like one car; this is big numbers.  Statistics work with big numbers, not with one. When there are other businesses — let’s say we’re talking with prepaid telecommunications.  When we think about the prepaid and we talk about the prepaid business, what I like (about) the business was they have many positive things.  No?  Actually, I call it the “Gillette Plan” because in Gillette, you sell the razor — or you promote the razor — to sell shaves.  Here, we were promoting the handsets, subsidizing handsets to sell phone cards.  That was the concept. The concept was make a design of a packaging to have it in the supermarkets and to sell them. That you go, and like you buy a razor, you buy a telephone. You have all this great presentation, it’s special, et cetera, et cetera.

First, you will make it very popular because you can have it at the hand in all the supermarkets and every place. Second, you will have expenses, big expenses because there will be more churning, and you need to pay commissions for the cards, and you need to pay commissions for the handsets, but they were a different price.  Prepaid has a higher price — the prepaid minute than the postpaid.  It was interesting, because when you take in business average cost, you have mistakes.  You need to make the analysis of everything.  It’s not for the public, but I shall say that my partners didn’t like us, and they went to meet us to say, “We don’t agree with the prepaid program. It is not profitable. You are jeopardizing — you are cannibalizing the other market,” et cetera, et cetera. There was a lot of opposition to this concept. Actually, in Canada, in the U.S. and in other countries, it’s not very usual to have these prepaid programs like you see, in the market that has grown strongly. When you have a country with very low income, many countries with low income, it’s the best way. Because they have the handset that they subsidize, and they have the calling party that pays, and they buy cards when they need the cards and when they have the money to buy the cards. They don’t need to pay a fixed rate every month, because the revenues they have are not all uniform.  Sometimes they have the money, and sometimes they don’t have it. Developed countries don’t necessarily understand this program, no?  But I think it has been very important and very successful.  More than 90 percent of our market is prepaid in many countries of the world.  More than 90 percent is prepaid.  I think Nigeria is one of them, and China and India. It’s very popular, and I think we were beginning in ’94, ’95 with the concept, and we have done very well with this program.

You created a product that works with the financial rhythm of the customer.

Carlos Slim: Sure. We also segment the market, and when you segment the market, you can segment in postpaid. With just postpaid, maybe you don’t get all the market. With prepaid, you have all the people that don’t have a regular income, that sometimes have money and sometimes don’t. They want to have a control of the cost, and they want to manage it this way. No?

Telecom tycoon Carlos Slim addresses a press conference prior to meeting with Brazil's President da Silva, at the Presidential Palace, in Brasilia, 2007. (AP Images/Eraldo Peres)
Telecom tycoon Carlos Slim addresses a press conference prior to meeting with Brazil’s President da Silva, at the Presidential Palace, in Brasilia, 2007. Slim is the leader of one of the world’s largest family business empires. (AP)

When the Mexican government was privatizing different industries, why did you choose the phone business? How did you know that the best return would be in cell phones?

Carlos Slim: When we got into Telmex, it was not very clear.

We were only two or three Mexican groups and 12 or 14 foreign groups, and we began to talk with all the foreign groups. We talk with maybe eight or ten, and we like a lot, as we see. We like France Télécom, and we agree to go for Telmex with them. Actually, we bought 25 percent of the company, not 100 percent — 25. Telmex was already in the stock exchange. The government has the majority. It was not 100-percent owned by the government. It was 50-something, and we paid like eight or ten times the value it had three years before. And we bought. Grupo Carso, not me. Grupo Carso, that was a public company. We bought five percent, 5.1, something like that, and SBC bought ten percent. The French bought 5.2, something like that. Another group of Mexicans, 5.2, and we bought that. The biggest stockholder was Southwestern Bell — afterwards called SBC — and in the market, many people win a lot of money, because the stock went from nothing to — we paid $8.6 billion for the 100 percent. That is 1.7 for the 20 percent. The mobile service was there. We had 25,000 customers, something like that. Now we have 150 million. We grew 66 percent for 15 years, every year.

How did we see that? Common sense.

That’s incredible growth. The Telmex executives thought promoting cell phones would cut into their customer base for land lines, but you found a gigantic untapped customer base for cell phones. How did you foresee that? Was it destiny?

Carlos Slim: Destiny? No.

I believe in circumstances, and I think that you make your own destiny, but your own destiny depends on the circumstances, and that in some way, you can say that circumstances take you to some destiny, but I believe in the freedom to create your own future. No? Because if it’s not there, it’s another place, but you will find it. It’s very clear just by common sense, the growing of mobile, because of many reasons. First, it is cheaper, because there are not the paraphernalia that you have in land line. You have a copper (wire) going from each home to other home, and big copper (wires) to the centrals. It’s very complicated, a land line company. No? A land line network. It’s like a water or power line. You need to have the pipe. You cannot send water by wireless, or energy, but you can send voice by wireless. You know about broadband TV. You know that with a big antenna, you (can) send to every place the signal. Well, if you can develop a network that you don’t need wire and cable and copper and all this, that means that is a lot more efficient and cheaper than the other. When you’re giving a land line, you are giving a land line to a house, to a home, but mobile is for a person, and there are more persons than houses. No? You can have maybe three or four persons per house. That means that if you have 20 million or 25 million houses, you have 100 million persons, and it is cheaper. The operation is a lot cheaper for communication.

And it’s cheaper to maintain.

Carlos Slim: The maintenance, the investment, everything. It was very obvious.

It wasn’t obvious to Telmex before you bought it. They only had 25,000 customers.

Carlos Slim: Well, it was because it was beginning the technology and the operation, and many telephone companies — land line companies — didn’t want to develop these, because you jeopardize the land lines, and we put them in to compete. We separated Telmex from América Móvil to compete between them, because the biggest competitor for local service is mobile.

Isn’t it like picking a favorite child, making them compete?

Carlos Slim: No. They’re not children. They’re not persons. If you have two organizations, you need to make them the best. If my children were going to be boxers or athletes, they’d need to compete between them. But in life, for your happiness, you don’t need to compete with no one.